Market Confidence Is Recovering, GDP Data Is The Catalyst!

thecekodok

 The United States (U.S.) economy is reported to grow faster than expected with gross domestic product (GDP) growing above pre -pandemic readings. This is because it is driven by the large-scale fiscal stimulus package and the more widespread Covid-19 vaccination.


GDP for the second quarter grew by 6.6% at a year -on -year rate as reported by the Commerce Department on Thursday. This reading is a revised result of the previously reported 6.5% figure. However, the latest reading is still below expectations which target growth of 6.7%.


The economy grew at a rate of 6.3% in the first quarter, and has been able to cope with losses due to the recession.


The reassessment of the second quarter GDP reading reflects a much stronger consumer spending rate than initially anticipated. At the same time, the Fed has maintained a loose monetary policy, kept interest rates low and raised stock market prices.



Consumer spending, which accounts for more than two -thirds of the U.S. economy, is also driven by increased vaccinations that drive demand for services such as air travel, hotel accommodations, and entertainment.


However, there are concerns that third-quarter economic growth could be curbed if the Covid-19 delta variant spreads.


As a result, Bank of America Securities has reduced its GDP growth estimate for the third quarter to 4.5% from 7.0%. Economists at Goldman Sachs (NYSE: GS) last week reduced their growth estimates for the third quarter to 5.5% from a 9% rate.


Overall, economists expect growth of around 7% this year, which is the strongest performance since 1984.

Tags